Tech Tests Buyers’ Resolve

Carnival Corp. has had a great year rebounding along with the rest of the travel-related industries’ stocks. However, shareholders’ reaction to today’s earnings may signal that the company is a victim of its recent success. 😬

The cruise operator reported an adjusted loss per share of $0.31, improving 81% YoY and beating the consensus view of $0.34. Meanwhile, revenues more than doubled to a second-quarter record of $4.91 billion, topping the $4.79 billion expected. 🚢

Higher pricing helped push passenger-ticket revenue up 144.4% YoY to $3.14 billion, while onboard and other revenue just *just* 58.6% to $1.77 billion. As for passenger stats, occupancy rose from 69% to 98%, passengers carried rose 76% to 3 million, and passenger cruise days jumped 91% to 21.8 million.

Looking ahead, executives now anticipate 2023 net per diems to be 5.5% to 6.5% above 2019 levels on a constant currency basis. That’s up from their previous guidance of 2.5% to 3.5%. They also raised their adjusted EBITDA outlook from $3.9 to $4.1 billion to $4.1 to $4.25 billion. 🔺

Despite the business seemingly firing on all cylinders and demand remaining strong, investors still sold the stock today. Although the consumer has held up better than expected in 2023, many are still worried about an unknown risk derailing the economy in the year’s second half. Additionally, concerns about costs rising further and weighing on margins are always top of mind for investors in capital-intensive businesses like cruise and airlines.

$CCL shares were down about 8% today but are still up about 80% year-to-date. We’ll have to wait and see whether longer-term investors use this dip to buy back shares or if they feel the company’s best results are already behind it… 🤷

While there are typically a lot of deals announced after a weekend, today was exceptionally busy. Let’s take a look. 👇

The world’s largest industrial property real estate investment trust, Prologis, owns 1.2 billion square feet in 19 countries. And it’s about to get even bigger. The company announced today it’s buying a portfolio of U.S. warehouses and distribution properties for $3.1 billion. It signals that industrial properties remain strong in an otherwise shaky commercial property industry. 🏗️

IBM is doubling down on its hybrid cloud services by acquiring Apptio from Vista in a $4.6 billion deal. Apptio built a platform to track how and where data lives in hybrid environments and how it’s being used in terms of financial and resource costs. With IBM’s existing IT automation software and AI platform, it will develop and sell solutions designed to help businesses manage and optimize their IT stack spending. The sale represents more than a double for PE firm Vista Equity Partners, which took Apptio private in 2018 for roughly $1.94 billion. 🌥️

Enterprise software company Databricks is getting into AI by acquiring MosaicML for $1.3 billion. It’s an open-source startup that built a platform organization can use to train large language models and then deploy generative AI tools from them. MosaicML raised just $64 million from investors, with its most recent round coming in at a $222 million valuation. With the company exiting for more than six times that valuation, it’s clear that companies are willing to pay up for the proper AI exposure. 🧱

AI-powered analytics platform ThoughtSpot is acquiring business intelligence startup Mode Analytics for $200 million in cash and stock. The mode will become a wholly-owned subsidiary when the deal closes, boosting its generative AI apps while doubling the company’s customer base and growing annual recurring revenue (ARR) to over $150 million. 💭

PacWest Bancorp shares jumped today on news that it will sell a $3.54 billion lender finance loan portfolio to asset management firm Ares Management. The move comes as the regional bank looks to bolster its liquidity and balance sheet further. With the sharp rise in interest rates increasing the risks of good loans turning bad, the bank is reducing its lending exposure to specific sectors like commercial real estate. Since the market has quieted down over the last two months, PacWest and other regional banks have been using this time to restore the confidence of depositors, investors, regulators, and other stakeholders through moves like this. 💰

UnitedHealth is acquiring home health and hospice caregiver Amedisys for $3.3 billion in cash. The move comes after Amedisys’ board scrapped an all-stock deal with Option Care Health at a lower valuation than UnitedHealth’s offer. The move will expand the giant’s presence in home healthcare, which it added to by buying LHC Group for $5.4 billion earlier in the year. However, that recent acquisition raises some anti-trust concerns about whether its acquisition of Amedisys will be unscathed through the regulatory approval process. 🧑‍⚕️

Government-backed group, Japan Investment Corp., is buying chipmaking materials provider JSR for $6.3 billion, representing a 35% premium to its recent closing price. JSR’s 30% share of the global market for a key semiconductor component, photoresists, will play a critical role in Japan securing its semiconductor supply chains. The move signals the continued race by governments around the globe to ensure they are prepared to build for the future without having to rely on any one trade partner or region. 🗾

The global leader in silicon carbide technology, Wolfspeed, Inc., raised $1.25 billion in secured note financing from an investment group led by Apollo. The deal also includes an accordion feature for up to another $750 million. Its 9.875% notes will mature in 2030 and are optionally prepayable, with the funds supporting the company’s $6.5 billion global capacity expansion plan. 📝

Internationally, PwC Australia agreed to sell its government business for one Australian Dollar after it was revealed it misused confidential government tax plans. The company will also appoint a new chief executive in the country. The move comes following a scandal that an ex-partner advising the Australian government shared drafts of corporate tax avoidance laws with colleagues, who used it to pitch potential clients. The leaks occurred between 2014 and 2017 but were recently revealed and now need to be accounted for by PwC leadership and others involved. 🕵️

And lastly, Lucid and Ason Martin entered a long-term strategic technology partnership. The plan will give Aston Martin access to world-leading electric powertrain technology to power the company’s battery-electric vehicles in the future. In exchange for its exclusively engineered and manufactured technology, Lucid will receive technology access fees in cash and Aston Martin shares. Supply arrangements worth over $450 million are also part of the partnership. 🔋